Microsoft earnings show AI is bolstering demand for cloud services
Subscribe to enjoy similar stories. Microsoft reported strong quarterly growth in its cloud-computing business that indicated its heavy investment in artificial intelligence is paying off. Revenue for the tech giant’s Azure cloud business—a core of its AI offering—rose 33% in the quarter through September, beating analysts’ expectations.
The Redmond, Wash., company’s overall revenue rose 16% to $65.6 billion as its net income climbed 11% to $24.7 billion. Analysts were expecting revenue of $64.57 billion and net income of $23.15 billion. Excitement about the potential for generative AI that can create computer code and summarize complex information has helped fuel a run-up in the shares of Microsoft and other tech companies since 2023.
Alphabet shares rose Wednesday after the Google parent announced strong results on Tuesday in its cloud-computing division, another beneficiary of the AI boom. Microsoft, and the tech industry more broadly, remains in the midst of a major spending spree on its AI, building data centers to power it around the world. CEO Satya Nadella has bet Microsoft’s future on AI.
The company has invested around $14 billion into ChatGPT maker OpenAI and is pouring cash into the expensive chips and data centers needed for the technology. The company has said it plans to match its spending growth to perceived demand. It has slashed costs in other areas, such as hardware, to avoid taking a large hit on profit margins.
Most of Microsoft’s AI revenue has come through its cloud services. The company has added the technology to its bestselling software such as Microsoft 365 and its Bing search engine. Microsoft’s revenue from its AI software products is small.
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